France and Germany agree to ease EU car emissions rules

France and Germany struck a provisional deal on Thursday on European Union auto industry rules, diplomatic sources confirmed to AFP. The agreement between the bloc's two largest economies would further loosen emission requirements for cars and define which vehicles count as "made in Europe", with Britain included. The accord is likely to shape EU policy as the bloc tries to revive its struggling car sector.

A long-running dispute

Paris and Berlin had been at odds for a long time over the direction Europe should take. Germany wanted less stringent carbon emission targets for carmakers and a broad reading of "made in Europe" that would cover key non-EU trade partners. France wanted to preserve the bloc's climate ambitions and keep the "made in Europe" public procurement scheme limited to EU countries. According to the draft, Berlin prevailed on the first point and Paris on the second. Diplomats said the deal remains subject to final approval from Berlin.

Emissions

The European Commission, the EU's executive arm, had proposed replacing the 2035 ban on new petrol and diesel car sales with a requirement for manufacturers to cut exhaust emissions from new vehicles by 90 percent. The remaining 10 percent would have been offset through various credits, for example by using low-carbon steel. The Franco-German deal drops that offsetting requirement, stating that residual emissions should not have to be compensated. It also lets cars running on renewable fuels count as "zero-emission" and makes it considerably easier for carmakers to hit CO2 targets. The "super credits" the Commission had suggested for small, affordable electric cars are extended to all vehicles regardless of size or length.

"Made in Europe"

Under the agreement, "made in Europe" for cars applies to the EU's 27 countries, with an opt-in for a few others, notably Britain and Norway, under certain conditions. That is narrower than the Commission's March proposal, which could have brought in dozens of partner countries. London welcomed the move: the office of Prime Minister Andy Burnham said that, if confirmed, it would be good news for the British automotive industry and the jobs and investment it supports. European carmakers had asked for Britain to be included, citing deeply integrated supply chains.